South Africa: Agri SA sees challenges in new codes of good practice

December 12 , 2017

South African agricultural industry body Agri SA has called on the Department of Trade and Industry (DTI) for flexibility in compliance with its recently promulgated Codes of Good Practice on Broad Based Black Economic Empowerment (BBBEE). 

In a release, Agri SA highlighted the importance of AgriBEE Sector Codes in bringing certainty to the sector in terms of what should be done to bring about transformation.

The entity mentioned while the codes were not compulsory, they were mandatory for any farming enterprise that wanted to do business with government.  

Agri SA brought up its reservations around the following two issues:

  • We appeal to the DTI to be more flexible with compliance with the three priority elements (the criteria), which include ownership, enterprise supplier development and skills development. Agri SA is of the opinion that socio-economic development should also have been included as a fourth criterium. This would have enabled Qualifying Small Enterprises (QSEs, or the R10 to R50 million annual turnover bracket) to choose any three out of these four elements.Farming enterprises, and especially the QSEs, face enormous challenges, which includes the drought and the struggling economy.Compliance to priority elements such as ownership, skills development and enterprise supplier development pose particular challenges for QSEs. Farming management systems are not always run as corporate management systems and it would be difficult for many farmers to comply with the ownership criterium.
  • Agri SA also foresees serious challenges with the expectation that large entities (the more than R50 million annual turnover bracket) which operate in more than one province should only use national demographic representation in terms of management control. This poses a serious problem for a province such as the Western Cape, where coloured people are in the majority. This would lead to serious racial polarisation, is discriminatory and totally impractical to implement. For example, farmworkers cannot simply pack up their belongings and move to another province.

In light of these aspects, the organization called on the DTI to manage the process in a realistic and pragmatic manner.

“We would have welcomed a greater understanding of the challenges faced by retailers that are dependent on AgriBEE compliant farmers,” Agri SA said.

“Undue pressure on these retailers will not help to grow the small number of black farmers who are currently able to meet the requirements of the formal market.

“This kind of growth will require a collaborative effort between government and organised agriculture to ensure that black farmers become market-ready. The latter is a long-term process and the Codes place an emphasis on government’s role.”

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